Saturday, August 13, 2011

Wild Swings in the Stock Market - New Research

By Zach Kouwe

Mebane Faber of Cambria Investment Mangement (and one of my clients) has a new research report out that examines some myths around buy and hold investing. It's especially prescient since Mark Cuban, owner of the Dallas Maverick, said this weekend that buy and hold investing was a "crock of shit." Cambria has a different investing philosophy than Cuban, namely a trend following quantitative approach.

In this paper, Faber takes a look at big one-day moves in the stock market, sometimes called "Black Swans." One of his conclusions is that, most of these events (both up and down) occur during times when the market is already falling. Avoiding the big swings not only helps you sleep better at night, but can give you better returns as well. Read the paper for more info.

Cambria Quantitative Research Monthly August 2011

Gowanus Lounge Coverage

By Zach Kouwe

Here'e the Gowanus Lounge writing about my research for Peter Tanous and Jeff Cox for their book, called Debt, Deficits and the Demise of the American Economy. The interesting thing is that the post, which was written a few months ago, calls the thesis of the book "far-fetched" and "highly unlikely." But, if you look at what has happened to the stock market in the last two weeks, plus the debacle of the debt ceiling coupled with the downgrade by S&P, the scenario in the book doesn't look that out of whack.

Here's a video of Peter Tanous on Tech Ticker with Henry Blodget recently.